OKX Partners with Komainu to Offer Custodial Services for Institutional Users

OKX Partners with Komainu to Offer Custodial Services for Institutional Users

OKX, the world’s second-largest cryptocurrency exchange in terms of trading volume, has joined forces with digital asset storage firm Komainu to enable institutional users to securely store their cryptocurrencies with the Nomura-backed custodian while utilizing those funds for trading on the exchange.

This partnership exemplifies how vertically integrated cryptocurrency exchanges are adopting practices from traditional finance by employing third-party custodians to segregate operations, aiming to mitigate the risks associated with potential exchange collapses like the one witnessed with FTX.

OKX is the inaugural client to utilize Komainu Connect, a regulated settlement and custody system designed for institutional customers. This system provides round-the-clock trading capabilities and employs a combination of cold storage, multiparty computation (MPC), and hardware security modules (HSMs).

Lennix Lai, the Chief Commercial Officer of OKX, explained the process: “Funds deposited in a Komainu custody wallet are transferred to a Komainu collateral wallet, which is then linked to an OKX account. The OKX account mirrors the balance, allowing active trading across OKX’s extensive array of spot and derivatives markets, which exceed 700.”

The Komainu Connect collateral wallet, which offers transparency to OKX, is connected to a tri-party account change agreement that adheres to institutional-grade standards. Sebastian Widmann, Head of Strategy at Komainu, elaborated on this agreement: “A tri-party legal agreement exists between Komainu as the custodian, OKX as the liquidity venue and provider, and Komainu’s client as the client of OKX. This arrangement permits Komainu’s client to trade directly on the exchange, with Komainu handling the settlement requirements.”

While OKX did not disclose the precise amount of assets under custody that would be transferred to Komainu, Lennix Lai stated that it would be a “significant” sum, with expectations for further growth as the firms enhance their institutional product offerings.

Lai emphasized OKX’s commitment to providing users with diverse solutions, stating, “We believe that the more options users have, the better. We offer on-exchange, off-exchange, and third-party balance mirror custody solutions.”

Komainu, established in 2020 as a joint venture between Nomura, digital asset manager CoinShares, and digital asset security company Ledger, operates under regulations in Jersey and Dubai, with offices located in London, Dublin, and Singapore.